The current market downturn has not been equal or fair. Some stocks have taken a much worse beating than others amid the volatility and churn. Technology stocks and stocks that thrived during the pandemic have been particularly hard hit since markets peaked in Nov. 2021 and turned lower. While some stocks have started to recover, others continue to fall, making our list of stocks to sell.
Where and when these stocks will bottom is anyone’s guess. But investors might be best to cut their losses before things get any worse. While taking a loss is never easy, holding onto a losing position can often compound problems and make a bad situation worse. Sometimes the best thing to do is admit a mistake and move on. Even the best investors in the world have to swallow a loss from time to time. Here is a list of seven faded stocks to sell before they bankrupt you.
Stocks to Sell: Canopy Growth (CGC)
A lot of investors were high on cannabis stocks (pun intended) for quite some time. However, the sector hasn’t played out as expected. At least, not yet. While Canada legalized cannabis, leading to a surge in the number of producers north of the border, the legal market has become saturated and has been unable to compete with a thriving black market.
At the same time, hopes that the Biden Administration would make it a priority to legalize cannabis in the U.S., where the market is 10 times larger than in Canada, have faded. The result has been a wave of bankruptcies and plummeting share prices.
The situation at Canopy Growth (NASDAQ:CGC) is typical of the entire industry. With its stock down 69% on the year and trading at $2.84 a share (penny stock territory), the Canadian cannabis producer has announced several rounds of job cuts and restructurings. Canopy Growth has also announced multiple changes among its senior executive ranks, most recently appointing a new president. It makes our list of stocks to sell.
Stocks to Sell: Teladoc (TDOC)
Like cannabis, telemedicine was a sector that a lot of people had high hopes for, especially during the pandemic. Shares of New York-based Teladoc (NYSE:TDOC), one of the biggest virtual healthcare companies in the world, skyrocketed during the pandemic, rising 130% to peak at $293.66 in Feb. 2021. Since cresting nearly two years ago, TDOC stock has plunged an eyewatering 90% to now trade at $28 a share. It’s another one of the top stocks to sell.
In 2022, TDOC stock is down 71%. The main issue that has sent investors running for the hills is that Teladoc is hemorrhaging cash. In the last 12 months, the company lost nearly $10 billion. The 2020 acquisition of diabetes health monitoring company Livongo Health proved to be a disaster and Teladoc has had to write off the entire $18.5 billion purchase price.
Stocks to Sell: Affirm Holdings (AFRM)
The practice of paying for purchases large and small over several equal installments had a moment in 2021 but it quickly faded amid a torrent of criticism from consumer advocacy groups, lawmakers, and financial institutions. As it turns out going into debt and paying high-interest charges to buy a $40 sweater is not a smart decision. Inflation at a 40-year high and steadily rising interest rates have also scared consumers away from “BNPL” as buy now pay later is known in the retail industry.
One of the casualties of this reversal of fortune has been Affirm Holdings (NASDAQ:AFRM), whose share price has fallen 88% in 2022 to now change hands at $11. The San Francisco-based company was founded in 2012 by Max Levchin, who previously co-founded a little financial technology company called PayPal (NASDAQ:PYPL). While PayPal continues as a going concern, Affirm Holdings’ future is a little more uncertain. The company recently reported that its operating loss widened by 73% from a year ago to $287.5 million.
With Peloton (NASDAQ:PTON), the workout-from-home craze lasted about as long as the popularity of Covid-19 masking. As social beings, most people prefer to exercise at a gym or fitness club surrounded by other people rather than sweating it out alone at home in front of a screen. Peloton and its stock have become victims of the post-pandemic reopening.
As a result, the PTON stock declined 67% this year. Sales at Peloton have declined more than 20% on a year-over-year basis in each of the past three quarters. Cumulative net losses total more than $3.5 billion, and user engagement is plummeting. The number of average workouts per month dropped 26% in this year’s second quarter alone. Peloton has now stopped reporting the engagement metric. In addition, while management is making efforts to turn things around by focusing on monthly subscriptions rather than bike and treadmill sales, and partnering with retailers such as Dick’s Sporting Goods (NYSE:DKS) to sell its fitness equipment, it all feels like too little too late for Peloton.
Back to Canada for this e-commerce train wreck. A darling of the pandemic, Ottawa-based Shopify’s (NYSE:SHOP) e-commerce platform for online stores and retail point-of-sale systems helped tens of thousands of small and medium-sized businesses move their operations online and weather the Covid-19 crisis. At one point, Shopify was the most valuable publicly traded company in Canada. But that was then.
As 2022 draws to a close, SHOP stock has plunged 72% on the year to now trade at $38 a share as demand for its services has evaporated with the global economy reopening. The company has not taken the drubbing lying down. In recent months, Shopify has undertaken a 10-for-1 stock split, shuffled its executive ranks to bring in a new chief financial officer, and announced a “pivot” to focus on the offline retail sector with electronic point-of-sale hardware that allows merchants to accept payments, monitor sales, and manage their inventory. So far, none of these efforts have helped the share price.
The crypto winter has become a raging blizzard as a succession of digital lenders, exchanges, and venture firms fail following the $8 billion collapse of the now notorious FTX. And right smack in the middle of the blinding whiteout is Coinbase (NASDAQ:COIN), one of the world’s largest cryptocurrency exchanges. COIN stock has crumpled 85% in 2022 as prices for cryptocurrencies such as Bitcoin (BTC-USD) and Ethereum (ETH-USD) sank and the entire industry teetered on the edge.
Coinbase reported three consecutive quarterly losses in 2022 as its revenue fell 53% to $576 million in the third quarter alone. Not only have investors thrown in the towel on crypto, but supply chain problems have made crypto mining equipment expensive and difficult to purchase, leading to further erosion of transactions on Coinbase’s exchange. Most recently, Coinbase CEO Brian Armstrong announced that the company’s revenue is likely to be half of what it was in 2021. Get out while you still can.
Most retailers have had a difficult time this past year, what with the economy slowing, inflation sky-high, and interest rates rising sharply. Most consumers have switched from refurnishing their homes while sheltering in place to focusing on keeping food on the table and gas in the tank. This has been bad for Wayfair (NYSE:W), the Boston-based e-commerce company that sells furniture and home goods exclusively online. W stock is down 80% over the past 12 months. In March 2021, the stock was trading at $350. Today, it sits under $40 per share.
Add supply chain problems and overseas manufacturing woes to the long list of Wayfair’s issues and you get a sense of why investors have hit the “sell” button on W stock. Wayfair’s Q3 print was an ugly one. The company reported that its revenue fell 9% to $2.8 billion in the quarter that ended September 30. International sales fell 24%, leading to a worse-than-expected net loss of $2.11 per share. Wayfair said it had 22.6 million active customers at the end of the third quarter, down 23% from a year ago. It will take a lot to turn this company and W stock around. This is definitely a faded stock to sell.
Disclosure: On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.